Following the SPD's decision to go into opposition, Angela Merkel will have to find a way to make a Jamaica coalition (CDU/CSU/FDP/Greens) work. However, Merkel will try to convince the SPD to continue with a grand coalition, so that an SPD comeback cannot be excluded. Given the complexity of a Jamaica coalition, negotiations could take 3-6 months. Our best estimate is that the new government will be in place in the first quarter of 2018.
Much attention has been brought to the low levels of volatility, either realised or implied, within financial markets currently. Within this report, we address whether this stability is likely to persist and assess the impact that central bank balance sheet reduction may have on markets.
As the global recovery continues apace, an orderly deflating of the bond price boom, fuelled by central banks‘ unconventional policy measures, is more likely than a sudden rupture, according to ETF Securities, one of the world’s leading, independent providers of Exchange Traded Products (ETPs).
The answer is yes…or at least that was the answer from Mario Draghi at the press conference after the September 7 monetary policy meeting, thereby indicating the importance of pursuing monetary accommodation in order to keep on supporting economic activity, despite the recent uptick in growth.